*iSelect is the trading name of iSelect Mortgages Pty Ltd (ABN 86 148 217 181). iSelect Mortgages Pty Ltd is a credit representative (Credit Representative 400540) of Auscred Services Pty Ltd (Australian Credit Licence 442372). iSelect provides a referral to Lendi Pty Ltd ACN 611 161 856 (Lendi) who provides credit assistance. Lendi is a credit representative of Auscred Services Pty Ltd (ACN 164 638 171) (Licensee). iSelect Mortgages Pty Ltd receives a commission from the Licensee for each new customer account created and for each home loan submitted through this service.
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Equity in your home loan is the portion of your home’s value which is not encumbered by a mortgage – it’s the part that you own. Equity changes over time, with things like market fluctuations and your repayments, but in general, your equity, over the life of a loan, will increase.
Simply find out your home's current market value. Subtract how much of your loan is still outstanding, and then the remaining figure is your equity.
For example, if your home is currently valued at $800,000 and you have $200,000 left to pay on your mortgage, your equity will be $600,000.
As it builds up, home equity becomes a handy ‘nest egg’. It can be used for a variety of things such as:
If you find that you have enough home equity to fulfil your needs, one of the ways you can access it is by refinancing your home loan.
That means, taking out a new loan to pay off your existing loan. But, instead of just borrowing enough to pay off your loan, you borrow against the current value of your house to finance whatever purpose you require. (see above).
The pros of accessing your home equity:
There are also a few cons you may want to take into consideration before refinancing to access your equity:
Refinancing is just one way of accessing your home equity, there are other ways that you can borrow against it, such as:
Refinancing to access your home equity also gives you the chance to make sure you’ve got the home loan that suits you. Take advantage of the opportunity, it could save you money and make the loan cheaper. Here are a few things to consider:
At iSelect we’ve partnered with Lendi to make it easier to find a great deal on your home loan*. Click here to get started comparing from a range of lenders online, or give Lendi a call on 1300 186 260.
Last updated: 10/05/2022